One of the big mistakes that one can make with money, according Money Smart Life is loss aversion. Loss aversion is different from figuring out your risk tolerance. Loss aversion is an overwhelming need to avoid losing money. It leads to making decisions based on how much you think you might lose. Here is what Smart Money Life says about loss aversion:

So what’s an example of loss aversion?  Smart Money uses the case of a penny-pincher who is so fixated on reducing the “loss” of paying too much for gasoline that they’ll drive halfway across town for cheaper gas, burning extra gas and putting more miles on their car.  Loss aversion often creates such irrational behavior where people actually end up spending more money in an effort to avoid a loss.

You want to be careful of how you operate in this manner. When considering financial planning options, think about why you want to make a certain decision. Is it because you are afraid of losing? And how much of a loss is at stake? Instead, try to make financial decisions based on your risk tolerance, whether than how loss averse you are.